No interest on first £1000 saved

guitarman001

This has likely been covered before (sorry!) but I assume this means advertised rates now do not include any tax? So TSB Classic Plus 5% you get the FULL 5% tax-free? What if, over a whole range of accounts, you earn £1001 in interest? You just submit a tax form at year-end and the £1 is taxed at 20%?
Likely my interest will come to more than £1k in a given year. If a higher rate taxpayer... take the amount over £1k and multiply by 0.4 to get the tax you owe...?

guitarman001

Sorry - I see this doesn't come into force until 2016!

LplateSaver

That's starting next year isn't it? Anyway it's not on the first £1000 saved its on the first £1000 interest earned. From what I read none of the accounts get taxed and you have to pay the tax yourself if applicable, but that may have been someone speculating on here.

guitarman001

Sounds right, thanks

kidmugsy

Yeah, and for 40% payers the allowance will be £500 p.a. of interest. That's assuming that this survives the lash of Balls.

ffacoffipawb

We are also assuming that the Champagne Socialist Benefits Party does not form the next government.

guitarman001

kidmugsy wrote: »

Yeah, and for 40% payers the allowance will be £500 p.a. of interest. That's assuming that this survives the lash of Balls.

What!? That's nothing!! Grrr...

I also hope Labour do not get in. God that would be awful.

alanq

Has anyone seen detail of how it is proposed the £1000/£500 will be calculated? What will happen to someone who strays say £1 over the 40% tax threshold? Will they lose £500 of the new allowance?

bowlhead99

Effectively if you get to save the tax on £1000 of interest as basic rate taxpayer you have been given a benefit to the value of £200. If you get to save the tax on £500 of interest as a high rate taxpayer, you have been given a benefit to the value of £200. So, a 'full' benefit is a £200 saving.

If you earned £1 into the top tax bracket, you would ordinarily pay 40p of tax and that would 'use up' 40p of the £200 concession they are willing to give you. So presumably they would still be willing to give you the £199.60 of concession on interest you earned in the basic rate band (equating to £998 of interest income being disregarded in that band).

So I would speculate that someone who earned a grand total of £999 of interest income taking them exactly £1 into the top rate band, would still get their £200 of tax saving, and would not have their new annual 'allowance' be slashed by £500. They would have it slashed by £1 from £1000 to £999.

But this is of course speculation. As the government which is in power for the tax year in which this comes in has not yet been announced, it can't be known whether or not it will happen, so the finer points are still TBA.

castle96

I know that my income incl. interest, will not exceed £15600 this tax year
(£15600 IS the magic figure isn't it)
Can I not therefore register for gross interest NOW instead of claiming it back at the end of the year ?

Trouble is my interest is more than £1000 so how do I 'allocate' which to claim gross on ?

Ed-1

castle96 wrote: »

I know that my income incl. interest, will not exceed £15600 this tax year
(£15600 IS the magic figure isn't it)
Can I not therefore register for gross interest NOW instead of claiming it back at the end of the year ?

Trouble is my interest is more than £1000 so how do I 'allocate' which to claim gross on ?

If your earned income + interest income is less than £15600 you don't have to pay tax on your interest this tax year full stop so you can register an R85 to claim gross interest now.

The £1000 personal savings allowance is totally different and is scheduled to be in force from 6th April 2016 (subject to the next government implementing it).